Quiamco v. Capital Insurance & Surety Co.
REITERATIONFacts
The Antecedents: Spouses Noe and Clarita Quiamco, engaged in the sea transportation business, faced a labor case where a decision was rendered against Clarita as representative of Sto. Niño Ferry Boat Services. Following this decision, which they received on May 7, 1997, the petitioners sought to appeal to the National Labor Relations Commission (NLRC). To perfect their appeal, they were required to post a supersedeas bond. Procedural History: The petitioners applied for a supersedeas bond with respondent Capital Insurance & Surety Co., Inc., fulfilling most of the required conditions, including executing a supplementary counter-guaranty with chattel mortgage and an indemnity agreement, and paying premiums. The bond was issued on May 23, 1997, and filed on May 24, 1997. However, the NLRC dismissed the appeal on July 16, 1997, for failure to post the bond within the ten-day period from receipt of the decision, rendering the labor case decision final. Subsequently, a writ of execution was served on the respondent surety company, which paid the judgment amount of P461,514.67. The respondent's attempt to recover this amount from the petitioners was unsuccessful as the undated check provided by the petitioners was dishonored. Consequently, the respondent filed a complaint for sum of money and damages against the petitioners, which the Regional Trial Court ruled in favor of the respondent. The Court of Appeals affirmed the RTC's decision, deleting only the awards for attorney's fees and litigation expenses, and denied reconsideration. The Petition: The petitioners filed a petition for review on certiorari under Rule 45 of the Rules of Court, challenging the Court of Appeals' decision and resolution. The core issues raised are whether the surety agreement was perfected and whether the petitioners are liable to the respondent. Petitioners argue that the surety agreement was not perfected because the condition of staying the execution of the labor case judgment was not met, as the NLRC rejected the bond for being posted out of time. The respondent, conversely, contends that the contract of suretyship was perfected by the meeting of the offer and acceptance, evidenced by the issuance of the bond after the petitioners complied with the requirements, and that the indemnity agreement binds the petitioners to reimburse the respondent for the payment made.
Issue(s)
Whether the surety agreement between the petitioners and the respondent was perfected despite the failure to stay the execution of the labor judgment. Whether the petitioners are liable to reimburse the respondent for the amount paid on the supersedeas bond.
Ruling
The petition is DENIED. The Court affirms the CA decision holding petitioners liable for reimbursement.
Ratio Decidendi
On Issue 1: The Supreme Court ruled that the surety agreement was indeed perfected. Under the Civil Code, specifically Articles 1315 and 1319, contracts are perfected by mere consent, which is the meeting of the offer and the acceptance upon the object and cause. In this instance, the object of the contract was the issuance of the supersedeas bond, and the cause or consideration was the payment of premiums by the petitioners. The Court clarified that the "whereas" clauses in the bond, which mentioned the desire to stay execution, were merely statements of the bond's purpose and did not constitute a suspensive condition. Citing Oesmer v. Paraiso Development Corporation (G.R. No. 157493), the Court held that for a condition to be suspensive, it must be expressed in certain and unambiguous terms, which was not the case here. Therefore, the contract became valid and binding the moment the respondent issued the bond after the petitioners met the requirements. On Issue 2: The Court held that the petitioners are liable to reimburse the respondent for the full amount paid. According to Article 2047 of the Civil Code, a surety is solidarily bound with the principal debtor, placing the surety on the same footing as the principal regarding the adjudged obligation. When the respondent was served with a writ of execution, it was legally bound to pay the amount guaranteed by the bond. Furthermore, the indemnity agreement signed by the petitioners explicitly required them to reimburse the surety for all payments and damages incurred as a consequence of the bond. The agreement also included an "incontestability of payment" clause, which stipulated that any disbursement made by the surety in the belief that it was obligated to do so would be final and not subject to contest by the petitioners. Finally, the Court noted that the failure to stay the execution was due to the petitioners' own negligence in filing the bond late, and they cannot use their own oversight to escape their contractual obligation to the surety.
Main Doctrine
Contracts are perfected by mere consent, manifested by the meeting of the offer and the acceptance upon the object and cause. In a suretyship agreement, the object is the issuance of the bond and the cause is the payment of premiums. The "whereas" clauses in a bond stating the intent to stay execution are merely statements of purpose and do not function as suspensive conditions that would prevent the contract from being binding if the stay is not achieved due to the principal's own negligence.